June 15 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said he expects a lower growth rate for the U.S. economy as it goes through an “adjustment” period.

“There is a clear trade-off between saving more and stimulating the economy in the short term to achieve stability,” Pandit, 52, said in prepared remarks for a keynote address today at the Detroit Economic Club’s National Summit.

Citigroup, the recipient of $45 billion in government funds, has itself to blame for its financial woes, Pandit said. It racked up more than $100 billion of credit losses and writedowns during a credit contraction that began in 2007. The bank is selling businesses and reducing headcount.

“We too were very credit-dependent and relied too greatly on non-core, or wholesale funding sources, including securitization and other aspects of the shadow banking system,” Pandit said. “And we suffered from imbalances in the economy.”

The deleveraging of the financial system means reduced credit creation, and less available financing and working capital, Pandit said. This will also lead to lower gross domestic product growth.

The U.S. and businesses will have to look for international growth, Pandit said. The country will also benefit from new technologies developed during the crisis, he said.

“We’ve all heard the phrase, ‘A crisis is a terrible thing to waste,’” Pandit said. “I’m confident that this crisis will re-ignite the creativity and entrepreneurship that has been the hallmark of the U.S. economy for over 200 years.”

Too Much Borrowing

Pandit said companies and consumers have borrowed too heavily and the country is paying the price.

“We have too much leverage as consumers and as a financial system,” he said. “This leverage-funded consumption and created the illusion of enhanced financial returns.”

The GDP growth rate may decline 1 percent to 1.5 percent, Pandit said. “It is not hard to envision a significant gap in the availability of credit,” he said.

Citigroup is making efforts to fix the financial system. It has extended more than $200 billion in credit commitments to U.S. consumers, businesses and communities since October, Pandit said. The company has helped more than 525,000 homeowners stay in their homes and aided 1.4 million credit-card customers with their debt through forbearance programs, he said.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net.

Last Updated: June 15, 2009 18:33 EDT